DStv-owner MultiChoice announces massive streaming video deal
MultiChoice has announced an agreement with Comcast’s NBCUniversal and Sky that will see South Africa’s broadcasting giant sell a 30% stake in Showmax.
The new Showmax group will be powered by Peacock’s technology. It will remain 70% MultiChoice-owned and will be 30% owned by NBCUniversal.
Peacock is NBCUniversal’s video streaming service.
MultiChoice explained that it has incorporated Earth UK Holdings Limited (EarthCo), a new UK-registered company that will trade as Showmax.
The DStv owner will contribute its existing Showmax business for a 70% equity stake in EarthCo.
MultiChoice will also provide ongoing business support through its local market expertise, local content production capabilities, its portfolio of general entertainment and sports rights licenses and its back-office support functions.
Through its subsidiary NBCUniversal, Comcast will inject cash for a 30% equity stake in EarthCo.
It will also provide ongoing support by licensing its Peacock platform and content from NBCUniversal, Universal Pictures, Peacock, and Sky.
EarthCo will hold a 100% interest in Showmax SA Pty Ltd.
Showmax SA will own all the Showmax rights, assets and liabilities in South Africa, a 79% stake in MSA Limited Nigeria, and the rest of the African operations.
MSA Limited Nigeria will own MultiChoice’s Nigerian rights, assets and liabilities. The deal will result in Comcast owning an indirect stake in MSA Limited Nigeria of 23.7%.
EarthCo will be supported at launch by MultiChoice’s local pay-TV operations.
It will provide a streaming service on the African continent, powered by Peacock’s technology and using the Showmax brand.
MultiChoice and Comcast have committed to funding EarthCo during its investment phase in proportion to their shareholdings.
EarthCo’s board of directors will initially consist of three representatives from MultiChoice, with additional appointments to be made in due course.
The board will appoint an executive management team featuring representatives from the existing Showmax structures, which will be infused with global talent in the coming months.
EarthCo’s senior leadership team will be based out of the UK and its Dubai branch.
Operational teams will be located in major markets, initially South Africa and Nigeria.
The agreement does not involve broadband, wireless or cable video, or any other of the businesses of either Comcast or Sky.
It also excludes the linear satellite, terrestrial, and streaming video businesses of MultiChoice (apart from services support), all of which will continue to operate independently and at arm’s length.
“Due to competitive sensitivities, specifics about the unique service offering, how existing subscribers can seamlessly migrate to the new service and detailed pricing will be announced closer to the launch date,” MultiChoice stated.
“Showmax customers will continue to enjoy the existing Showmax service up until the new service is launched.”
MultiChoice promised the new Showmax would build on the platform’s success to date and strive to create the leading streaming service in Africa.
“The service will combine MultiChoice’s accelerating investment in local content with an extensive pipeline of international content licensed from NBCUniversal and Sky,” it stated.
“This will be complemented by third-party content from HBO, Warner Brothers International, Sony and others, as well as live English Premier League football.”
African content, such as Showmax Originals, and local content from MultiChoice’s proprietary channels, including Mzansi Magic, Africa Magic, and Maisha Magic, are also part of the deal.
“The global video media landscape has changed rapidly in recent years, led by broadband adoption and the growth of direct-to-consumer streaming platforms,” MultiChoice stated.
“Although Africa has lagged somewhat, it is now approaching an inflection point in terms of broadband connectivity and affordability.”
MultiChoice assured that it continues to invest in its linear pay-TV businesses to drive growth and increased penetration.
However, it believes this is an appropriate time to step up its ambition and investment in the subscription video-on-demand and over-the-top segment.
In its statement, MultiChoice laid claim to launching Showmax as the first African streaming service in 2015.
This is inaccurate. Showmax was preceded by Vidi, a streaming service from Times Media Group that launched in August 2014.
MTN also launched a streaming service in partnership with Discover Digital called FrontRow in December 2014 — months before Showmax came on the scene.
MultiChoice only launched Showmax on 19 August 2015. Although not first to the party, Showmax has outlasted Vidi and FrontRow (which was later rebranded “VU”).
“The Showmax team has been growing both its paying and add-to-bill subscriber bases, delivering strong audience engagement through unique programming,” MultiChoice stated.
“It has delivered several market innovations around content downloads, adaptive bitrates and compression, as well as low-end device support,” it said.
“Through its technology solutions, Showmax is able to accept payments in more local currencies and from more payment platforms than any other streaming service across the continent.”
MultiChoice said the completion of the transactions is subject to certain conditions and is expected to close in April 2023.
EarthCo will have a March year-end to align with MultiChoice as the majority owner.
The transactions contemplated in the agreement do not fall within a category transaction as defined in the JSE Listings Requirements.
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